Criminal justice primer

I had no idea that crime rates in California varied so much by county until I saw this grpahic in a primer on criminal justice issues released today by the LAO. Read the whole thing here.

LAO GRAPHIC.

From dream fuel to eco-nightmare

The New York Times today has a cautionary tale for those who want to wean us from fossil fuels: look at what happened with palm oil. An excerpt:

Spurred by government subsidies, energy companies became so enthusiastic that they designed generators that ran exclusively on the oil, which in theory would be cleaner than fossil fuels like coal because it is derived from plants.

But last year, when scientists studied practices at palm plantations in Indonesia and Malaysia, this green fairy tale began to look more like an environmental nightmare.

Rising demand for palm oil in Europe brought about the clearing of huge tracts of Southeast Asian rainforest and the overuse of chemical fertilizer there.

Worse still, the scientists said, space for the expanding palm plantations was often created by draining and burning peatland, which sent huge amounts of carbon emissions into the atmosphere.

Read the whole thing here.

California 10th in spending per capita

The Census Bureau this morning published new numbers showing how the states rank in government spending and revenues. The latest numbers are from 2005. The latest rankings are from 2004. In that year, California was 10th in spending per capita on state and local government. You can find the information here.

The PPIC, meanwbile, is rolling out a report today based on that and similar data, showing where California puts its spending priorities compared to other states. You can find that one here.

Senate Republican plan

Republcians in the state Senate have rolled out their health care proposal. It's a collection of tax credits, deregulation, fund shifts and expansion of Medi-Cal that emphasizes preventive and primary care, consumer choice and flexibility. You can read the entire outline here.

Let there be (flourescent-only) light

Assemblyman Lloyd Levine says he wants to ban the sale of incandescent light bulbs in California by 2012. Says the lawmaker:

"Incandescent light bulbs were first developed almost 125 years ago, and since that time they have undergone no major modifications. Meanwhile, they remain incredibly inefficient, converting only about five percent of the energy they receive into light. It’s time to take a step forward – energy-efficient bulbs are easy to use, require less electricity to do the same job, cut greenhouse gas emissions, and save consumers money.

"According to the Rocky Mountain Institute (RMI), a nonprofit organization that focuses on energy policy, replacing a 75-watt incandescent light bulb with a 20-watt compact fluorescent would result in the same amount of light but would save 1,300 pounds of carbon dioxide and save customers $55 over the life of the bulb (while the life of one 75-watt incandescent bulb is roughly 750 hours, the life of a compact fluorescent is a whopping 10,000 hours). Meanwhile, incandescent bulbs use 750 kWh over 10,000 hours, while compact fluorescents use only 180 kWh."

Anti-immigrant = compassion for the poor?

At least a few Republicans in Washington, D.C., led by Sen. Jeff Sessions of Alabama, have figured out that the most effective way to push their anti-immigration views is to argue that legal and illegal immigration holds down wages and hurts the poor. Sessions last week introduced an amendment to the minimum wage bill to withhold federal contracts from companies caught employing illegal immigrants. And this is what he said about the issue:

“We cannot have a discussion on minimum wage without recognizing the negative impact of illegal immigration on the salaries of American workers. The competition American workers face from illegal laborers is a serious problem that holds down their wages. Contractors need to be held accountable for not hiring Americans,” Sessions said. “I believe this amendment is a step in the right direction. Government contractors should set an example because they are being paid with tax dollars.”

This is potentially dangerous for Democrats, in California and elsewhere. They are unabashedly pro-immigrant, and many are agnostic on illegal immigration. Over the long term, that's probably good for the economy. But in the short term, just like outsourcing and technology, immigration causes disruption in labor markets and hurts those who are displaced. To the extent that Republicans can tap into that frustration among the middle class and working poor, they can benefit. It has always amazed me that more of them didn't use this language earlier, rather than focusing on the cultural issues or the cost of government services to illegals. Instead of sounding like he wants to punish illegal immigrants, Sessions is sounding like someone who wants to protect recent immigrants and citizens at the bottom of the income scale.

Don't forget, immigration was the top issue for California voters in this PPIC poll released last week. It out-polled education, health care, the economy and the state budget.

Everything you wanted to know...

...about state transportation programs. From the legislative analyst. A sample:

Also, this nugget:

While auto travel on state highways has increased by 26 percent since 1990, transit (bus and rail) ridership overall has experienced almost no growth. Again, this is due to the slight drop in bus trips (the mode representing the bulk of transit ridership), offset by growth in other transit modes, such as intercity, commuter, and urban rail which have experienced considerable ridership growth.

On state revenues

Here’s a little more detail on the topic of Clea Benson’s story in the Bee today about a potential shortfall in state revenue.

According to Brad Williams, the chief economist for the LAO, the state collected about $6.1 billion in estimated and miscellaneous personal income tax payments last December and January. For this December and January, the Department of Finance forecast a big jump, to $7.1 billion for the same two-month period. But the latest figures with just a few days left in January suggest that the total will actually go down, to right around $6 billion. And that, of course, would leave the governor with about a $1 billion hole in his budget estimate only weeks after it came off the press.

These are year-end payments that come from investors and small business owners, mostly. They reflect not only the final quarter of the calendar year, October through December, but also the year as a whole. If these taxpayers realize late that they had a great year, they usually pay up in their estimated payments so they don’t get dinged at tax time for underpaying. The payments usually, but not always, are a harbinger of what’s to come in April, the state’s biggest revenue collection month.

A couple of points might work in the other direction, however. One is that bank and corporation tax payments were stronger than expected in December, by about $350 million. The other is that the administration’s estimate for April is not as bullish relative to a year ago as it was for December and January. So it’s possible that even if these bad numbers are borne out in April, the effect won’t be as magnified as it otherwise would have been.

If it looks like a duck

The Consumer Alliance for a Strong Economy has begun airing a new ad in Sacramento attacking the governor's tax proposals to fund health care. You can view it here.

The Consumer Alliance, by the way, is a 501c4 organization formed to educate the public on public policy issues. As such, it has no legal oblgiation to disclose its donors, and doesn't do so.

Health benefits tax treatment

According to the Department of Finance, the total value of the state version of the health care tax break Bush talked about Tuesday night is about $4 billion annually. That's the amount of state income tax Californians would be paying each year if their health benefits were taxed as income. What Bush is proposing on the federal level is to treat health benefits as income and then give everyone an automatic $15,000 deduction if they have family coverage and $7,500 for individual coverage. This would generally mean a shift in tax benefits from those with the most expensive employer-provided plans, which generally means the wealthiest people, to those who now buy their insurance on their own, which would include more middle-income people. The same could be done in California with a portion of that $4 billion. The health benefits exemption is the third largest tax exemption the state has, after the mortgage interest deduction and the exemption of retirement fund contributions made by employers.

UPDATE: The $4 billion number is from the Finance Department's annual report on "tax expenditures." You can find it here. The $4 billion represents the increased amount that would be paid in California personal income tax if the state treated employer-paid health benefits as regular income.

Wellpoint chief pans guv's health plan

Health insurers generally reacted positively to Schwarzenegger's plan when he released it earlier this month. But in private they have been a little less laudatory. And little by little they are pointing out pieces of the plan that they could, well, live without.

Yesterday, the president and CEO of Wellpoint -- the Blue Cross parent -- told reporters and analysts that his company doesn't like the proposal to require insurers to spend 85 percent of premiums on services. He said because administrative costs are fixed, the limit would prevent the firm from offering low-cost plans where the percentage spent on admin would be higher.

You can read his comments here.

LAO on infrastructure bonds

Graphic: Legislative Analyst

The LAO has a good overview of what's at stake in the implementation of the infrastructure bonds voters approved in November. You can find the report here.

U.S. Supremes rule on California sentencing

The U.S. Supreme Court today struck down an aspect of California's determinant sentencing criminal justice system. This could be the final nudge the state needs to overhaul the way it sentences and treat convicted felons.

Insurance emergency

http://www.insurance.ca.gov/0400-news/0100-press-releases/0060-2007/release008-07.cfm

Baldassare to head PPIC

Mark Baldassare, the longtime pollster for the Public Policy Institute of California, has been named the institute's new president and CEO.

Baldassare says he will keep a hand in supervising the Institute's polling operation, which, he says, will continue at the same level of intensity to which we have become accustomed -- about a poll a month.

Redistricting reform

I moderated a panel this morning on redistricting reform sponsored by the Voices of Reform project. The turnout of panel participants was not encouraging. The organizers invited the four legislative leaders to come or send a representative, to be joined by a person from the governor's office.

Senate Republican Leader Dick Ackerman and Assembly Republican Leader Mike Villines attended, as did Cynthia Bryant, a deputy chief of staff for Schwarzenegger. But the speaker never committed to coming or sending anyone, and did neither. A representative of Perata's office had confirmed to attend but did not show up. That left the discussion a bit one-sided.

It was still rather informative, however. Villines and Ackerman both said they were enthusiastic about reform, looking for something that could pass muster with voters, and open to just about anything. They both said the idea of using judges to pick an independent panel is probably dead. Villines said he has had maybe a half dozen conversations with the speaker since November on the subject, and he believes Nunez is sincere about supporting an independent commission. He said they are probably most divided over how big of a role the Legislature should retain. He favors no role, while he said Nunez would like to keep the Legislature involved at some level.

As a final question, I asked all three panelists how they would rate the chances of something passing on this subject in the Legislature this year. Ackerman and Villines both rated it a 7 on a scale of 1 to 10. Bryant, saying she had to echo her boss's optimism on just about everything, gave it a 10.

The entire discussion is supposed to be webcast on the VOR site soon.

Federal appeals court rules against MD health mandate

A federal appeals court has upheld a lower court decision striking down Maryland's "Wal-Mart" health care law, which would have required employers to spend 8 percent of payroll on health benefits or pay a surcharge to the state. The court ruled that the state law violates a federal law that gives the national government a clear field to regulate employee benefits. This could have direct consequences for Schwarzenegger's proposal, which would require employers to spend 4 percent of payroll on health care or pay a tax to the state.

The Big Chill

The governor has proclaimed a state of emergency in 10 California counties where farmers are suffering big losses from the ongoing freeze. They are:

Fresno, Kern, Kings, Madera, Merced, Monterey, San Luis Obispo, Santa Barbara, Tulare and Ventura.

The governor is asking for expedited federal assistance. More counties might be added to the list later if warranted.

Report: state wastes $1B on school intervention

Researchers from California Business for Education Excellence and the Pacific Research Institute have taken a look at what the state and its students are getting from more than $1 billion spent so far to help improve low-performing schools. Their conclusion: not much. The schools in the program are not doing any better than similar schools that did not participate and did not get the extra money, they say. And they say the state's accountability program is covering up that failure by using a system to assess schools that most people do not understand. They recommend dropping the complicated Academic Performance Index in favor of an easy-to-understand system that reports the percentage of students who reach grade-level proficiency. Their report's executive summary is here.

Hearing it from the right

Bill Saracino says Schwarzenegger's idea of a "post-partisan" era is just another way of saying a "post-Republican era."

But in reality the peace Schwarzenegger envisions in Sacramento is a phony peace, a peace as artificial as the governor’s tan. As one who ardently supported Schwarzenegger in 2003, it pains me that it is becoming clear that this emperor is wearing no clothes. Those in the state who actually do revere Friedman, Reagan, and other mainstream Republican leaders have a duty to point out this fact. This doesn’t make us obstructionists. It makes us realists.

Defining deficits down

Strange that the governor, just as he is closing in on a balanced budget, wants to change all the definitions and stop talking about the structural deficit. You'd think he would want more focus on it, not less. Anyway, it doesn't matter. The credit rating agencies will want to see the real numbers, and the LAO will no doubt cut through the spin and tell us what she thinks of the bottom line.

The governor's take is that he has reduced what he is calling the "gross operating deficit" in 2007-08 to about $1.8 billion. But after backing out things like spending on retiring the deficit bond, and one-time revenues, he says the true, or "net" operating deficit would be zero. Actually a tiny, $20 million surplus.

This is not such a wacky way of looking at it. What he is saying is, how much money will the state take in during that 12-month period, and how much will it spend on services delivered during that 12-month period? That's a decent way to judge the government's fiscal prudence. But it's not the entire story.

As for the structural deficit, the projection of revenues versus spending in the year after the proposed budget is done, the guv and his people now say don't bother, that's too far away to be meaningful. But that's the deficit he -- and we -- have been talking about for years. And that's the deficit he claims to have inherited. So he's not going to get away with ignoring it now. Besides, the structural deficit number is perhaps more important than the operating deficit -- gross or net -- because it tells us what the long-term trendlines look like, and it's an early red flag if the state is headed for trouble, or not getting out of trouble quickly enough.

Finance Director Mike Genest, when pushed, said his best guess of the structural deficit in '08-09 is about $800 million. If the LAO agrees, that's pretty good news, since it's billions less than was projected a few months ago. We will have to wait and see.